Growing competition for Venezuelan crude oil exports to the US: Logistical and insurance challenges lie ahead

According to WPB, following the issuance of an executive order by US President Donald Trump lifting sanctions restrictions on Venezuelan crude oil, major oil companies and traders, including industry giants Chevron, Vitol and Trafigura, are competing fiercely for US government contracts to export this oil to the US market.

These companies have the experience and expertise to manage the oil supply chain and can act as intermediaries between the Venezuelan government and American buyers. But their success will depend on their ability to find innovative solutions to overcome the challenges at hand.

One of the biggest obstacles to this operation is the poor condition of the marine transportation fleet. due to years of neglect and lack of financial resources, many of the countries in this country have been old and worn out and they have not been properly maintained. this situation is associated with the risk of oil spills and environmental pollution. well-informed sources, many ships have been under direct sanctions, and that makes it difficult for American companies to use them directly.

Moreover, the reservoirs of oil storage in Venezuela's land are almost completely filled. this has increased the need for rapid evacuation of oil through the sea, but due to the unsuitable conditions of the ships, this work is fraught with complications.

Although the USA has issued a necessary permit to export oil.oil companies face significant insurance challenges to secure the safe transfer of crude oil from Venezuela to the United States. the requirements for liability and insurance are in such a way that other ships cannot contact the sanctioned. this requires a complex and time-consuming transmission chain that requires careful coordination and extensive planning.

According to internal sources, Trafigura said at a meeting with white house officials that the first ship of the company should launch its loading operation soon. the move reflects the seriousness of the competition for the company, but it is not clear how the company could overcome logistical and insurance challenges.

Also, the increase in the exports of Venezuela's crude oil to the USA could have a significant impact on global energy markets. this can help reduce the price of oil, while increasing Venezuela's share in global markets. but if there are logistical or mishaps, this may lead to an increase in oil prices.

The future of Venezuela's oil exports to the US is still unknown.the success of the operation depends on several factors,including Venezuela's political and economic situation, the trump state's commitment to its new policies and the ability of oil companies to overcome the logistical and insurance challenges. these developments, however, have provided a new opportunity for the Venezuelan economy and global energy markets.

Along with logistical and insurance challenges that earlier pointed out, the inadequate situation in the Venezuelan oil infrastructure was also considered a serious obstacle to the new export of crude oil to the USA. the country's offshore reservoirs have been away from repair and maintenance for years, and it poses a number of dangers to companies that plan to load oil. the exhaustion of the reservoirs, the risk of oil spills, pollution of the environment and the adverse events, increases the costs of insurance and responsibility.

In these circumstances, oil companies are looking to find alternative solutions to the use of Venezuelan worn ports. one of these solutions is the expansion of oil transfer operations through ship-to-ship transfer. that is, oil is transported directly to the large ships, which in turn can transfer oil to other ports.

Tankers is one of the companies seeking to expand this type of operation in Venezuela. the company plans to repeat its former model used in the Amway gulf in Venezuelan. in this way, oil is transported from the large vessels to smaller ships that can be legally protected and shipped to the USA or other international oil markets.

Currently, Maersk is active in Aruba and Curacao, islands whose waters are traditionally where the Venezuelan oil was transported. the use of these islands makes it possible to transfer oil more legally with minimal risks, but the important implication is that it is more expensive than the use of Venezuelan ports.

However, the operation of oil transfer through the ship to ship is still faces challenges.

Another navigational source emphasized that the operation would be highly complex due to the shortage of smaller ships for transporting oil from ships to docks as well as insufficient maintenance of machinery and equipment.

The need for smaller ships to transfer the volume of oil from oil exerts great pressure on the transport fleet of the region and may lead to delay and disruption to operations.

In addition, equipment exhaustion and a lack of skilled workforce can reduce the efficiency of these operations and increase the risk of accidents.

Another company, AET (Asian Energy Transport), has also been involved in oil-transfer activities before imposing sanctions against Venezuela in 2019. having enough experience and expertise, the company can play an important role in the new operation. however, it is not clear whether, after lifting sanctions, it will re-enter the activity in Venezuela.

In total, Venezuela's crude oil exports to the U.S. faces several challenges. infrastructure exhaustion, shortage of small ships, insurance complications and logistical requirements, all together have made it a major challenge for oil companies. success in this direction requires careful planning, extensive coordination and investment.

By WPB

News, Bitumen, Trade, Venezuela, crude oil, AET, ship-to-ship, USA